Arctic Patrol Ships Budget 'Insufficient,' PBO Report

OTTAWA - There's a fresh spat brewing between the Parliament's top bean counter and the Conservative government, this time over Arctic patrol ships.

Parliamentary budget officer Jean-Denis Frechette said there's little chance the government can afford to buy between six and eight vessels on a budget of $3.1 billion.

Frechette said that's only enough money to pay for four Arctic patrol ships — and even then, there's only a 50 per cent chance the vessels get built on that budget.

The number of ships could drop to three if there is a delay of more than a year, he added.

"PBO analysis suggests that the current budget will be insufficient to procure six to eight (Arctic/offshore patrol ships) as planned," the PBO said in a report released Tuesday.

"Rather, it is more likely that, if there are no delays, the current budget will allow for four ships to be built. However, any delay over a year would mean that the budget would likely only be sufficient to build three ships."

Public Works Minister Diane Finley dismissed the report's findings.

"We are confident that we will build six Arctic offshore patrol ships," she said during question period.

Finley also said the PBO got its numbers wrong.

"I should point out that the numbers provided by the PBO are based on erroneous data, rough cost estimates of international vessels with varied capabilities, and they're derived using inaccurate specifications," she said.

"In fact ... in one of his assumptions, the PBO said, and I quote, he was 'unable to locate reliable, sufficiently contemporary Canadian data on an acquisition of this nature.'"

Frechette and assistant PBO Mostafa Askari said that's because the government refused to give them all the information they needed to do their work.

The Defence Department refused to give the PBO a statement of operating requirements for the ships, Askari said. The PBO requested the document under the Access to Information Act, he added, but what it got back was heavily redacted.

"The department made its own judgment about what we are supposed to get at PBO," Frechette said.

"Because it's not financial or economic data, they consider that as not being part of the mandate. We dispute that. We disagree with that.

"Having the blueprint of a ship is part of the information that you require to do an economic or budget analysis of the acquisition for Arctic offshore ships."

Industry and military sources have told The Canadian Press that the government has scaled back its original plan to buy between six and eight vessels, choosing instead to buy five with an option for a sixth.

But the president of Irving Shipbuilding, which was selected in 2011 to build the ships, said the federal government has not changed its mind. The deadline to sign a deal to begin constructing the vessels is the end of the year.

Defence and industry experts have said it's not unusual for the government to scale back large procurement projects to reduce costs.

The PBO said if the government wants at least six ships, the budget would need to be increased by $470 million.

Not surprisingly, the opposition parties pounced on the PBO report.

"There's two things going on: one is it's just a pure inability to manage these complex projects on the government's end," said Liberal MP Joyce Murray.

"The second thing is that this military procurement budget became a giant piggy bank to raid in order to be able to offer tax breaks in the 2015 election and target votes."

This is not the first disagreement between the government and the PBO.

Former budget officer Kevin Page often found himself at odds with the Conservatives during his tenure. He once tried to challenge the government in court to turn over information on its cost-cutting programs. The Federal Court sidestepped the question of whether the government can deny information to the PBO.

Frechette said he has a "different relationship" with the government.

"It's a different style, I'm a different person," he said.

"We do have, I think, with many departments a better relationship. It's not a matter of better or worse or whatever. It's really just a different approach that we're having. But we still have some difficulties.

"This is a good example of, you know, the department not providing the information."